I’m not saying America’s money won’t go down in value, as I think it has to at this point with the current fiscal policies. I’m saying that the value of America’s assets have not gone down YET. If unemployment lasts long enough to cause wages to go down and companies lose infrastructure from lack of capital, then what America has to offer will be in great supply at low prices. Deflation and Inflation are spirals that do not effect the economy over night unless what the economy had to offer is worthless overnight.

Like when Iceland went down – their currency Krona took a free fall too. And the Ruble is going down with fall in oil prices in Russia.

But we don’t see that happening with the USD as the Japanese, Chinese Brits and almost everyone holds a lot of USD as their reserves and can’t afford to let the dollar slide by too much.

If lending increases due to property values going up and the low interest rate then the new currency injected into the system will make the supply of money greater than before the crisis, and we will face inflation. In inflation, the stock market is likely to see a rise, as it will be easier to buy stock at higher prices as the money is worth less.

The economy itself changes slower, and if unemployment increases with businesses shutting down, then you will see an economic crisis that will effect the currency as well. At that point the actual goods and services offered by Americans will be worth less than what they used to be to the world.